Toll Brothers Inc. (TOL) Makes Investors Observer Momentum Plays List

Posted: Tuesday, March 16, 2010 8:39 AM EDT
By: Market Intelligence Center Staff

Toll Brothers Inc. (NYSE: TOL) closed yesterday at $19.82. So far the stock has hit a 52-week low of $15.19 and 52-week high of $23.62. Toll Brothers stock has been showing support around 19.35 and resistance in the 20.17 range. Technical indicators for the stock are Bullish and S&P gives TOL a very positive 5 STAR (out of 5) strong buy rating. TOL appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Sep '10 20 covered call for a net debit in the $17.92 area. That is also the break even stock price for this trade. This covered call has an 186 day duration, provides 9.59% downside protection and an 11.61% assigned return rate for a 22.78% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the TOL Jan '11 15 Call and selling the Sep '10 20 call for a $3.95 debit. The trade has an 186 day life and would provide 4.39% downside protection and a 26.58% assigned return rate for a 52.00% annualized return rate (for comparison purposes only). Toll Brothers does not pay dividends at this time. [ATU-Seven Summits Research]